How Zara solved the mystery of what women want
Shock horror — it’s stylish affordable clothes. So why can’t M&S and H&M do the same?
NO ONE would give a second glance to the elderly man who can sometimes be spotted wandering across the main square, Plaza Maria Pita in the pretty port of La Coruna on Spain’s windy North Atlantic coast.
With his crinkled brown eyes and balding pate, Amancio Ortega does not seem remotely exceptional. Dressed most days in a blazer, open-neck shirt and light coloured slacks, he looks like just another kindly grandpa.
But appearances are deceptive. For this obscure Spanish octogenarian is the multibillionaire founder of the Zara retail chain. He has revolutionised High Street fashion and made himself richer than Facebook tycoon Mark Zuckerberg in the process.
Senor Ortega probably has more influence over women’s wardrobes than anyone else on the planet. He is arguably more powerful in the world of fashion than flamboyant figures such as Karl Lagerfeld, the dandyish Chanel designer, who at 83 is similar in age, but practically nothing else.
Ortega certainly sells more frocks. Earlier this month, Zara’s parent company Inditex, whose other brands include Massimo Dutti and Uterque, announced sales of more than £9 billion in the first six months of last year alone.
Figures like those have made Ortega the richest man in Europe and the second wealthiest in the world with a fortune estimated at more than £60billion. Only Bill Gates, the founder of Microsoft, is worth more at about £63 billion, according to the rankings by U.S. magazine Forbes. Zuckerberg is a relative pauper with just £42 billion to his name.
Zara opened its first UK store in London’s Oxford Street in 1998 and now has 68 up and down the country. Women of all ages and income brackets stalk its brightly-lit floors.
Forty-something professionals cast a beady eye through the hangers in search of Zara’s trademark sharp tailoring, while their teenage daughters covet the spangly party dresses and tulle skirts. And the intergenerational appeal doesn’t end there.
Perhaps the most telling sign that it’s Zara that has cracked what women want is the fact that fifty and sixty-somethings are venturing in, snapping up knitwear and browsing at the same rail of coats as their granddaughters.
It is one of Zara’s coats — a collarless blue-and-white mock-Chanel design costing £69.99 — which has become so popular this year it has its own account on picture-sharing website Instagram, called ‘That Coat’.
Zara has plenty of wealthy celebrity followers: it’s a key destination for ‘highlow’ dressers who team posh designer clothes with cheaper High Street finds.
POLITICAL fashion-plate Samantha Cameron is a known habitue of the chain. Her favourites have included a pair of burnt orange cigarette pants costing £39.99 that she has worn to several high-profile events.
The Duchess of Cambridge is another fan, wearing a pair of £29.99 skinny jeans from the store teamed with a pair of kneehigh Penelope Chilvers boots, on her Canada tour this week.
The question for rivals such as M&S and John Lewis is: how does Zara do it? After all, the tills at Zara carried on ringing right through the financial crisis. It has seemed impervious to the economic fallout and high unemployment in its home country of Spain.
Shares in parent group Inditex have risen from just over £2.50 when it floated on the Madrid stock market in 2001 to £28.50 this week.
The secrets of Zara’s seemingly relentless rise are to be found in its headquarters in Arteixo, just outside La Coruna.
Amancio Ortega still heads there to work most days, and can often be seen chatting over lunch with colleagues in the staff canteen.
Wedged between a fish processing factory and a power station is the nerve centre for a fashion empire that extends from Auckland, where the first New Zealand store will open next month, to Vladivostok.
Zara has stolen a march on M&S and other rivals by turning the business model for High Street fashion upside down.
While Marks, John Lewis and other clothes retailers spend millions on ad campaigns — sometimes with questionable success — Zara does virtually no advertising. It gives no discounts for the fashion press and there are no loyalty cards or perks.
But the key difference is that whereas other stores put out a collection of clothes and cross their fingers that customers like it, Zara does it the other way round: it finds out what women want, then makes it for them. The beating heart of this operation is a bank of screens at Arteixo, where scores of staff are in constant contact with store managers around the world.
There are no job-titles, but their task is to glean as much information as possible about trends in the stores and on the streets nearby.
In a buzzy atmosphere similar to a financial trading floor, they are concentrating avidly on gathering intelligence by the bucketload on what women want — and which menswear and kidswear is popular — based on what is selling at individual stores.
All Zara staff are encouraged to be hyper-observant about street style and to report back trends. Every morning, the manager of each store anywhere in the world will hold a staff meeting, where employees working on the floor and at the tills will pass on their perceptions of what customers like and dislike, any praise and any complaints.
‘Most of the staff are young and fashionable so they notice what people are wearing in bars and clubs and on the street,’ says one source who has worked with the company. ‘There is no formal policy on spotting trends, it is just that everyone is steeped in a culture of having their finger on the pulse.’
A small army of designers, numbering about 300, sit nearby, poised to spring into action cutting patterns and sewing prototypes, based on the information on trends on the ground gleaned by their colleagues.
A large proportion of the styles won’t even make it to the rails in the stores as they are whittled down from 100,000 designs to the 50,000 that go on sale each year.
The designers start by creating a sample, which is made up into a garment on a stitching production line.
Then, once the
prototype has been produced, the design team model their own creations, parading and twirling up and down the design floor to gauge reactions from colleagues — there are no professional models. Anyone and everyone in the HQ can give their opinion, and only those clothes that pass that popularity contest are approved for sale. Even after that, the designers are fed information through the intelligence-gatherers about how their creations are then being received by customers.
Initially, only a few garments in any particular style will be produced and will be carefully monitored to see how well they sell — and there may be tweaks to the detail along the way. All of this takes place on a huge scale: Zara delivers 500,000 items globally each year.
Jesus Echevarria, director of corporate affairs, describes it as ‘accurate’ fashion, which is targeted with laser-precision at particular shops. ‘The manager of menswear for the Oxford Street store might tell the designer that the last green jacket has not been well received, but that the blue jacket with fringes has been popular,’ he says.
‘So the designer must forget her lovely green jacket, even though she thought it was magnificent, and focus on the blue trend.’
Of the thousands of designs to hit the shops over the course of a year, each store will typically receive two deliveries a week, chosen to appeal to its specific customers.
‘One store located in an area with a lot of tourists is completely different to another in an area full of professionals, even in the same city,’ says Echevarria. Only a few items of each design will be shipped to any given store, so they are not left with piles of leftover stock.
The speed and flexibility of the operation means Zara can respond quickly to changes on the ground. If there’s a cold snap, it ships in more jackets; if it’s unseasonably warm, winter woollies are put on hold.
The business has come a long way since the launch of the first Zara store, which opened in La Coruna in 1975 and is still there.
The chain was almost called ‘Zorba’ because Ortega was obsessed with the film starring Anthony Quinn. Perhaps fortunately, the name was changed to Zara when Zorba was discovered to be already in use by a local bar.
Most of the manufacturing takes place close by, in Spain, Portugal or Morocco, so that clothes can be delivered quickly. One risk is that it could be a victim of its own success and become over-exposed, prompting fickle fashionistas to seek out less identifiable brands.
‘Zara’s success is down to its design capability and its universal appeal. It is not cheap, but it matches high-end brands at a fraction of the price,’ says Maureen Hinton, of market research group Verdict. ‘The only danger is of it becoming ubiquitous.’
But my field trip to my local store illustrates why Zara does so well. In among the embellished bomber jackets that would appeal to my 22-year-old niece, I spot a rustcoloured pencil skirt that will be perfect for autumn.
At £29.99, I don’t even bother trying it on before I go to the tills …